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Before we get to the top five statements that NAR has publicly made (which can be used by you in your agent negotiations) – let’s start by finding out a little bit about who NAR is and why what they say should be important to you and your potential agent. We will get to the top 5 quickly we promise, but knowing the clout of NAR will demonstrate the true power of the statements below for the consumer as they have come directly from NAR’s mouth, so to speak. NAR is incredibly powerful in the real estate industry.
NAR, according to its website, is “America’s largest trade association, representing 1.5 million+ members, including NAR’s institutes, societies, and councils, involved in all aspects of the residential and commercial real estate industries.” NAR has been under fire recently, both from within, and outside, of the industry. As mentioned in a another blog, NAR settled Burnett for $418 million and agreed to a few significant rule changes. There have been allegations of sexual harassment by a former president of NAR towards employees of NAR. Most recently, there is a growing chorus among agents that they see very little value in return for the dues they pay to NAR, and the most value to those agents (and some say the only value) is that you must be a member to get access to many multi-listing services (MLSs) in the country. NAR has been embattled. But still, NAR is NAR, and NAR is the “voice” of the real estate industry – their words matter and are still very powerful. After the Burnett settlement, NAR has publicly made many pro-consumer statements. Use their words to your advantage.
With the above being stated, let’s get to the top 5.
- Compensation for your agent remains fully negotiable and is not set by law – NAR specifically states, in its Settlement FAQ, the following: “Compensation for your agent remains fully negotiable and is not set by law, and if your agent is a REALTOR®, they must abide by the REALTOR® Code of Ethics and have clear and transparent discussions with you about compensation.” This is probably the most important statement from NAR to be used in your negotiation. For instance, if an agent were to say, “Commissions are not negotiable,” your obvious response should be “NAR says in their FAQ that it is negotiable and that is what I intend on doing with you.” You would want to clarify whether the agent just does not want to negotiate (that is allowed) or are they saying commissions are not allowed to be negotiated by law. The line between the two statements is fine, but you should understand the difference and also understand that they can be negotiated – it may be that the agent just does not want to agree to get paid less. Memorize the above statement from NAR – just kidding, but it should flow off your tongue.
- For the Buyer Asked to Sign a Written Buyer Agreement – Directly from NAR’s consumer guide on whether written buyer agreements are negotiable: “Yes! You should feel empowered to negotiate any aspect of the agreement with your real estate professional, such as the services you want to receive, the length of the agreement, and the compensation, if any. Compensation between you and your real estate professional is negotiable and not set by law. In the written agreement, the compensation must be clearly defined (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended or a range. Only sign an agreement that reflects what you have agreed to with your real estate professional.” Very wise advice NAR – we fully and wholeheartedly agree with that one!
- Agents Cannot Put Their Interests in Commission Above that of Representing Their Client – This point is something that every consumer needs to understand. We anticipate two blogs on this area, called “steering,” because it is still very prevalent in the industry and can have significant financial ramifications for both buyers and sellers. For this current blog, however, commit this one to memory, from one of NAR’s Consumer Guides: “The REALTOR® Code of Ethics prohibits ‘steering’ buyers toward homes because the REALTOR® will be paid more, or away from homes because the REALTOR® will be paid less. Similarly, the REALTOR® Code of Ethics prohibits a REALTOR® from telling a seller that buyers will be ‘steered’ toward homes because the REALTOR® will be paid more, or away from homes because the REALTOR® will be paid less.” Much more about steering in our “Steering” blog, so go there for a full explanation.
- Understand the Agreement – As NAR states, “[b]efore signing [an] agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much.” It may not be a bad idea to have an attorney look at it.
- What to Do If You Believe an Agent Has Violated NAR’s Code of Ethics – NAR is crystal clear in what you need to do should you feel that an agent has put their interests before your interests: “If a REALTOR® acts in a way that places their interests before yours, this is a violation of NAR’s Code of Ethics and should be reported to your state or local REALTOR® Association for investigation and potential disciplinary action.” If you feel this has been done – DO IT!
